‘They al­most built a statue, you know?’

Coun­cil­lors in Hamil­ton’s old city wards get a spe­cial tax fund to spend on in­fra­struc­ture – but how it’s been used has come un­der fire. And with the re­cent re­draw­ing of ward bound­aries, get ready for an ‘awk­ward’ con­ver­sa­tion about who will be get­ting wh

The Hamilton Spectator - - FRONT PAGE - MATTHEW VAN DONGEN The Hamil­ton Spec­ta­tor

a political slush fund. Oth­ers call it a valu­able weapon in the bat­tle against rav­aged roads and side­walks in the old city of Hamil­ton.

In Wards 1 and 2, it is cel­e­brated as a rare ex­am­ple of di­rect democ­racy.

The area rat­ing spe­cial cap­i­tal rein­vest­ment re­serve has a bor­ing of­fi­cial name, but a colour­ful his­tory.

The pot of cash was cre­ated to fund old city in­fra­struc­ture re­pairs, but has fa­mously — or in­fa­mously — been used for ev­ery­thing from the ex­pro­pri­a­tion of a crime-rid­den ho­tel to fund­ing for school break­fast pro­grams to the re­pair of a pri­vately owned theatre.

It nearly paid for a $200,000 statue to con­tro­ver­sial punk rock hero Frankie Venom be­fore pub­lic ou­trage squashed the idea.

Area rat­ing in­fra­struc­ture spend­ing spurs reg­u­lar pub­lic de­bate be­cause each old city coun­cil­lor has wide lat­i­tude in how to use nearly $1.7 mil­lion per year. That in­cludes to­tal dis­cre­tion over a lit­tle­known $100,000 bud­get The Spec­ta­tor re­ported on Satur­day.

But a new de­bate looms over the fate of the in­fra­struc­ture kitty thanks to grow­ing pub­lic scru­tiny, the up­com­ing fall elec­tion and dra­matic ward bound­ary changes that af­fect where the con­tentious cash can be legally spent.

What is the area rat­ing fund?

was cre­ated in 2011 out of a coun­cil com­pro­mise meant to even out tax rates across the evolv­ing post-amal­ga­ma­tion city.

The short sum­mary of a long de­bate: Sub­ur­ban wards started pay­ing more taxes for some ser­vices, but Wards 1 through 8 were not given a cor­re­spond­ing tax cut. In­stead, the ex­tra tax­payer cash goes into an an­nual re­serve ded­i­cated ex­clu­sively to in­fra­struc­ture within the old City of Hamil­ton.

Right now, that adds up to $13.4 mil­lion a year, with each coun­cil­lor able to spend up to $1.7 mil­lion an­nu­ally. Since 2011, they’ve spent a com­bined $68 mil­lion.

Large-scale dis­cre­tionary spend­ing by elected city of­fi­cials has to be “han­dled care­fully to avoid the per­cep­tion of con­flict of in­ter­est,” said Richard Leblanc, a York Univer­sity as­so­ciate pro­fes­sor spe­cial­iz­ing in gov­er­nance and ethics.

“You want to be trans­par­ent and to have strong back-end ac­count­abil­ity,” said Leblanc, who told The Spec­ta­tor he would ask for pe­ri­odic in­ter­nal au­dits of dis­cre­tionary spend­ing if he lived in Hamil­ton.

Dis­cre­tionary coun­cil­lor spend­ing is not un­heard of in other cities.

Un­til re­cently, coun­cil­lors in Sud­bury con­trolled spend­ing of up to $50,000 per ward meant for in­fra­struc­ture and com-

mu­nity grants. But coun­cil re­turned con­trol over the cash to bu­reau­crats in 2016 fol­low­ing pub­lic crit­i­cism and an au­di­tor gen­eral’s re­view.

Some crit­ics have also com­plained about the amount of con­trol wielded by Toronto city coun­cil­lors over cash col­lected via Sec­tion 37 “com­mu­nity ben­e­fits” agree­ments with de­vel­op­ers whose projects don’t meet zon­ing rules.

In Hamil­ton, coun­cil must pub­licly vote on vir­tu­ally all pro­posed area rat­ing spend­ing — but it is al­most un­heard of for coun­cil­lors to vote against each oth­ers’ ward projects.

Most coun­cil­lors choose funded projects them­selves with vary­ing lev­els of con­sul­ta­tion with city staff and res­i­dents. In Wards 1 and 2, how­ever, res­i­dents get to vote on the projects via a unique “par­tic­i­pa­tory bud­get” process.

The amount spent in any one ward can vary dra­mat­i­cally, in part be­cause coun­cil­lors some­times bank in­fra­struc­ture cash for spe­cial projects like buy­ing a clos­ing school prop­erty, for ex­am­ple.

For ex­am­ple, the lat­est re­serve data show Ward 4 Coun. Sam Merulla has spent $10.2 mil­lion over seven years — while coun­cil­lors in Ward 7, pre­vi­ously Scott Du­vall and now Donna Skelly, have spent a com­bined $5.6 mil­lion in ap­proved projects.

Ahead of the fall elec­tion, some lo­cal res­i­dents are call­ing for an end to the largely coun­cil­lor-di­rected spend­ing — or at least a crack­down on a fa­mously broad def­i­ni­tion of “in­fra­struc­ture.”

“Coun­cil­lors should not be de­cid­ing on a whim where to spend this money,” ar­gued res­i­dent and coun­cil critic Gabriel Ni­chol­son in a re­cent let­ter to coun­cil.

Ni­chol­son — who has also asked in the past for a pro­gram au­dit — ar­gued spend­ing on con­sul­tants, char­i­ta­ble grants, school-owned play­grounds and a theatre fa­cade fall out­side the stated in­fra­struc­ture pri­or­ity of the spe­cial tax levy.

“We need to ad­dress a grow­ing ($3 bil­lion) in­fra­struc­ture deficit that will never end. It’s time to end this pro­gram un­til an al­ter­na­tive can be de­vised.”

But coun­cil­lors say the spe­cial levy is do­ing its job. In 2017, for ex­am­ple, close to $9 mil­lion in area rat­ing cash was ap­proved for roads, side­walks and re­lated re­pairs, with hun­dreds of thou­sands more go­ing to park and fa­cil­ity projects.

A ma­jor­ity of res­i­den­tial street “shave-and-paves” on the Moun­tain or in the lower city are funded through area rat­ing cash, added en­gi­neer­ing di­rec­tor Gary Moore.

But it is also true that hun­dreds of thou­sands of dol­lars, if not mil­lions, have been spent on projects that stretch the def­i­ni­tion of pub­lic in­fra­struc­ture re­pair.

Brian McHat­tie, for­mer Ward 1 coun­cil­lor, is of­ten cred­ited with first us­ing the term “so­cial in­fra­struc­ture” to jus­tify the use of area rat­ing cash for laud­able but less-than-con­crete projects like break­fast pro­grams, for ex­am­ple.

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